Last week, the Australian Financial Review ran one of those apology stories on page 3 which in the context of The Fin looks utterly normal and like it is preaching to its choir. However, owing to the fact that The Fin is pitched to a section of the population who very much lives in the top 25% of socio-economic fortunes in Australia, then when an article like this reaches the general public, it looks tone deaf.
Unlike other nations which have a more vibrant press, Australia's news outlets as far as print media, that is newspapers, are concerned, are very very narrow in vision. Australia has a rightist media group, another a rightist media group, and a series of miniscule independent newspapers which act as a passion projects and move the needle of national discussion exactly three-quarters of four-fifths of diddly-squat.
This apology story in The Fin, came with with the classic local newspaper photograph of someone looking grumpy and pointing at something. It tried to make the argument that the new tax/levy by the Andrews Government in Victoria on short-term rentals, was unfair because of who it would fall on. It tried making the case that a lady with a multi-million dollar property portfolio wasn't rich, as the sorrowful tale of woe.
‘I’m not rich, I’m a single mum’: Airbnb tax hits property owners
The former real estate agent and hospitality worker now works as a sales executive but has three properties which she rents on Airbnb. She is already feeling the effects of the state government’s $4.6 billion tax slug for property owners in the May budget.
Ms Taylor’s properties are a two-bedroom apartment in Kew owned by her self-managed super fund, which she will hopefully use to retire, her previous residence in Williamstown, which is now an investment property, and a holiday house in Torquay that her family shares with other holidaymakers.
- Australian Financial Review, 21st Sep 2023
Admittedly I can not know for sure exactly what Ms Taylor’s properties are worth but by using realestate.com.au I can at least take a survey and then do some calculations based upon the survey.
2 Bedroom Apartments & units for sale in Kew, VIC 3101
Average of ten properties listed: $832,300
2 Bedroom Houses for sale in Williamstown, VIC 3016
Average of ten properties listed: $729,700
2 Bedroom Houses for sale in Torquay, VIC 3228
Average of ten properties listed: $1,495,800
$832,300 + $729,700 + $1,495,800 = Total: $3,057,800
According to the Australian Financial Review, this is apparently "Not rich". According to the Australian Bureau of Statistics and Applying a 4% inflation rate to the last census, a property portfolio this extensive would place her in the 97th percentile. Okay, she is not the 1% but she is well inside the top 5%.
The conclusion that we can derive from the numbers is that The Fin is trading in Fine Farms 25L Blended Gold, but why they would peddle a male bovine's third finest product warrants further examination.
At our core, human beings have an amazing ability to normalise everything. From pain, to extreme cruelty, racism, apathy, weirdness, willful blindness; even happiness, luxury, and advantage. You can see this across entire realms of political discussion; which explains why fantastically rich people still want government subsidies to send their children to private schools, why business owners will invent moral justifications why they can treat their employees like garbage, and in this case why someone who is very obviously rich is prepared to have her name dragged and ridiculed through the national press just so she can protect a few thousand dollars.
Generationally speaking, this person is most likely to be member of a third generation of a family with wealth. The first generation will have actually worked for a core of capital. The second generation will be given advantage and may or may not be witness to the work put in. The third generation who will never know what that kind of work entailed, can only grow up in relative comfort and this will be normalised.
It makes perfect sense why this lady does not 'feel rich'. She likely lives in a very wealthy area and that means that the people around her, her neighbours and friends, and the local community groups of which she might be a member, all come from that same socio-economic group. Australia likes to tell itself the story that it is an egalitarian society but it has spent the better part of 235 years ensuring that this was always a myth and a lie.
In the second instance, the imposition of any kind of tax or levy to someone who previously did not have to pay it, feels like a very personal violation. Just like human beings have an amazing ability to normalise everything, they also have an amazing ability to take notice of immediate irritations. The story of the Princess and the Pea is less about the Princess' superhuman abilities to detect legumes in her bedding but more about the ability of those who have extreme luxury and wealth to be instantly annoyed by even the smallest irritation. The fable is more or a moral tale than a mere piece of comic farce.
As it turns out, the Second Law of Welfare Economics says that you can provide literally any given economic outcome provided you alter the initial conditions and inputs. Money tends to act a bit like a viscous liquid and flows about the place but it can be directed by putting roadblocks in its way. In this case, the Andrews Government in Victoria would like to discourage short-term rental accommodation in the hope that these properties would be made available for long-term rental accommodation. The principle is sound. Taxation changes the behaviour of the flow of money and capital and by placing a roadblock in its way, it is hope that money will flow somewhere slightly different.
The other reason why taxation like this works so well is due to the marginal utility of money. As someone gets more money, the actual benefit and happiness that they derive from that very last dollar decreases. Of course if you do not have very much then every single dollar is critical but if you have say $3,057,800, you are not likely to miss that last 3,057,800th dollar as much as someone living a hand to mouth existence is. Try the experiment yourself if you don't believe me. Eat five jars of mayonnaise. By the time you get to that fifth jar (if), then that mayonnaise will have ceased to be lovely some time ago; instead of being the kind of loveliness that you get from a sensible amount on a nice chicken sandwich.
The Australian Financial Review of course must run stories like these because as this kind of business, it relies on the continued existence of these kind of people. The chattering and illiterate class will read the Daily Telegraph and Herald-Sun. The people who are prepared to think a bit will read The Age and The Sydney Morning Herald. The people who are not prepared to think and want an intellectual right-wing view of the world preached to them will read The Australian. The Australian Financial Review's audience is the 'business class' who live in an almost insulated world away from having to do actual work. This lady is very obviously a member of the 'rentier class' who has managed to normalise her wealth and is now having a panic attack at the thought that the very last few dollars of her fortune might be taken away.
Addenda:
I do not want to dox this lady but comments on The Fin's Twitter account indicate that she owns seven other rental properties apart from the ones which would be taxed under this short-term rental scheme. Almost certainly she has a property portfolio worth more than ten million dollars.
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